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TRANSPORTATION Equipment availability is up; demand, unfortunately, is down

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Logistics equipment shortages have contributed to the challenge of moving metals, although relief on this front is more evident.

The panic state that left some mills' shippers and service centers wondering how they'd deliver metals to customers a year or two ago no longer has a grip on the rail and truck markets, with equipment now more readily available, shipping executives say.

"The availability seems to be loosening up significantly from, say, a year ago," said Roy Berlin, president of Berlin Metals LLC, Hammond, Ind., a specialist in the processing and distribution of tin mill products and stainless steel strip.

Berlin recalled that supplies of transportation equipment had been very tight a year ago, when demand for trucks was stronger. "We're seeing a lot more availability of trucks for our standard routing," he said. "There's no question there is less demand. A year ago we would schedule trucks and some wouldn't show up. That's not happening today."

However, he and other executives noted that fuel surcharges remain high and are a challenge, particularly for long-distance shipping since regional competition becomes more difficult.

John R.S. Batiste, president of Klein Steel Inc., Rochester, N.Y., said his company's fuel costs for a fleet of 18 trucks increased 6 percent during the first half compared with last year.

Klein Steel has shifted some plate transport onto rail coming into its Buffalo service center to improve efficiency, he said. But he described rail as being less dependable than trucking, noting that a delivery window of several days is required for trains while truck deliveries can be scheduled much more punctually.

A dedicated fleet of torpedo cars for carrying liquid metal between the Illinois and Indiana plants of ArcelorMittal has forestalled equipment availability problems for the steel producer, said Gregg Gholston, process manager for transportation at the Mittal Steel USA Inc. plant in Riverdale, Ill.

Punctual delivery of the rail cars, which generally are moved by the Indiana Harbor Belt Rail Road Co., Hammond, Ind., is another challenge for the ArcelorMittal plants since the trains, which need to arrive at their destination before their loads cool, frequently cross several other working freight lines.

"I think if you back up to about two years ago, there was an extreme panic on the part of railroads and shippers that there was going to be a railcar shortage," Craig T. Longardner, manager of materials and transportation for Steel Dynamics Inc., Butler, Ind., said. The result was that railroads placed more orders for cars than might have been necessary, and lengthy leases were entered into by shippers.

"Fast forward three years," he said, "and today you have the situation where CSX (Corp.) is actually parking railroad cars because their deliveries of cars came in and they now have to store them."

Steel Dynamics has leased about 150 gondolas for handling scrap to take some of the pressure off scrapyards, but has refrained from leasing coil cars for shipping finished products. "There seems to be a more free-flowing supply of coil cars out there," Longardner said.

As has been the case in the past—and likely will be again in the future—the pendulum in the equipment end of the logistics sector has swung too far, Longardner said. "People said there aren't enough rail cars and we all need to do something, but everyone did too much."

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